Design for Micro-Enterprise: An Approach to Product Design for Emerging Markets

Design for Micro-Enterprise: An Approach

to Product Design for Emerging Markets

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Austin-Breneman, Jesse, and Maria Yang. “Design for

Micro-Enterprise: An Approach to Product Design for Emerging Markets.”

Volume 5: 25th International Conference on Design Theory and

Methodology; ASME 2013 Power Transmission and Gearing

Conference (August 4, 2013). © 2013 ASME International

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http://dx.doi.org/10.1115/DETC2013-12677

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DESIGN FOR MICRO-ENTERPRISE: AN APPROACH TO PRODUCT DESIGN FOR

EMERGING MARKETS

Jesse Austin-Breneman∗

Department of Mechanical Engineering Massachusetts Institute of Technology

Cambridge, MA 02139 Email: jlab@mit.edu

Maria Yang

Department of Mechanical Engineering, Engineering Systems Division Massachusetts Institute of Technology

Cambridge, MA 02139 Email: mcyang@mit.edu

ABSTRACT

Product design for emerging markets in the developing world is a rapidly growing field due to a steadily increasing mar-ket and an interest in profitably transforming consumer quality of life for this population. Economic and cultural barriers as well as other constraints present a daunting challenge for designers working in this area. This study documents current best practices and proposes a framework for future designers with a focus on creating products that foster micro-enterprise. These guidelines are drawn from existing literature and interviews with practicing designers of products for emerging markets. Four case studies are presented ranging across several product categories.

1 INTRODUCTION

Recent literature has focused on strategies for product growth opportunities in emerging markets [1–3]. Mature markets in industrialized countries have led Multi-National Corporations (MNCs) to look for growth in these areas. Although individ-ual consumers in these markets have extremely limited buying power, the sheer size of the market makes these opportunities at-tractive to a variety of organizations. Prahalad estimates that the 4 billion people who have an income of $2 or less a day represent approximately 5 trillion in purchasing power parity [4]. Non-governmental Organizations (NGOs) have traditionally worked in this sector and continue to develop products aimed at

improv-ing the quality of life for this segment of the population. So-cial entrepreneurs such as International Development Enterprises have also been developing products specifically for these mar-kets [5]. The increase in product development for these marmar-kets has been driven by “the potential of serving an unserved mar-ket and alleviating the level of global poverty while still earning a profit [6].” These organizations have been chiefly concerned with finding new strategies for delivering consumer goods and services to users in these markets. For example, many MNCs are currently using a “single-serve” distribution model where goods are packaged in small quantities for cash-constrained con-sumers [4, 7].

Many methodologies have been developed by practitioners and researchers in this field to create these products, including customer value chain analysis [8], design for the base of the pyramid (BoP) [9], the product service system approach [3], de-sign for sustainable development [10] and dede-sign for emerging markets [11, 12]. Both Pralahad and Chavan explore the differ-ent ways the market can be divided and how the strategies dif-fer in perspective and target user [4, 12]. Regardless of strategy used, there is a dearth of successful products in this area and many high-profile failures. One study reports that less than half of companies entering these markets meet their own goals [13]. This can be compared to a new product failure rate at launch of 33% in mature markets [14]. Other literature has also pointed to mixed results from MNCs working in emerging markets, with many operating at a loss [6].

Proceedings of the ASME 2013 International Design Engineering Technical Conferences and Computers and Information in Engineering Conference IDETC/CIE 2013 August 4-7, 2013, Portland, Oregon, USA

DETC2013-12677

Product failures can be attributed to many factors, but de-sign literature points to a fundamental misunderstanding of the users [1, 12]. This type of failure is common, perhaps as Bon-sepe suggests inevitable, during remote design when the users are geographically separated from the designer [15, 16]. For ex-ample, Kellogg’s attempted to introduce breakfast cereal to the rural Indian market, assuming that Indian consumers would use cold milk. It failed to anticipate the breakdown of user experi-ence when the cereal was eaten with warm milk [12]. Another failure mode is a misjudgment of the balance between affordabil-ity and qualaffordabil-ity. Many consumers in these markets are extremely price-conscious due to limited finances, but have been shown to pay more for a quality product than risk financial loss due to product failure [11]. The use of a “global” platform or product designed without regard to local market needs is another com-mon failure mode. Whirlpool’s world washer, a single washing-machine platform meant for all emerging markets, did well in many markets, but failed in India because the tolerances between the rotating drum and the case destroyed the thin layers of cloth common in Indian clothing [12].

Recent business literature suggests meeting unmet needs among micro-entrepreneurs, who represent a large segment of the population, may be the best strategy for operating in these markets [17, 18]. Micro-enterpreneurs are individuals who gen-erate small amounts of income from their own business activities, often in an informal market sector [19]. Karnani estimates there may be limited profit potential among consumers in emerging markets due to the cost of reaching heterogenous and distributed customers and their low to non-existant discretionary income [7]. London highlights how a focus on micro-entrepreneurs can cre-ate a positive value feedback loop between an organization and the entrepreneur and lead to more sustainable development [19]. The organization’s product empowers the entrepreneur to gener-ate more revenue and in turn, buy more products from the orga-nization. In this vein, London further investigates the constraints facing BoP producers and how different ventures addressed these constraints [19]. Pitta provides an overview of the main threads in this discussion as well as case studies supporting this strat-egy [6]. This literature, as well as the observations and analyses of the case studies presented in this paper, demonstrate an impor-tant unmet user need for products among micro-entrepreneurs in emerging markets.

This paper proposes a set of guidelines called Design for Micro-enterprise (DfME) and seeks to respond to many of these criticisms by linking observations from successful products with insights from business literature. In design methodology lit-erature, each structured method has an overarching principle and perspective which informs design decisions. The above-mentioned strategies share a target market and the goal of al-leviating global poverty. A gap in the design methodology lit-erature is that these strategies view the user as a passive con-sumer. DfME is framed around understanding the end-user as a

micro-entrepreneur. The process therefore transforms from a tra-ditional Business to Consumer (B2C) transaction to a Business-to-Business (B2B) transaction; from a consumer to a commercial product [20]. While this transition limits the type of products that can be designed, it helps address many of the obstacles facing de-signers in this field by focusing the design process on building a long-term relationship with the user and supporting their income generation. The approach presented in this paper is meant to help the designer evaluate design ideas with this perspective in mind. A unique distinction of B2B markets is that the relation-ship between the two enterprises is paramount. Every trans-action is aimed at maintaining and improving this relationship; thereby growing the manufacturer’s brand. In that vein, liter-ature has shown that service contracts and guarantees become increasingly important in a commercial product [21]. Quality control has also been shown to be important for B2B and brand management [22]. Educating and interfacing with the enterprise client in an effective way when explaining the value proposition is another requirement for strong brand growth [21]. These fac-tors contribute to establishing a strong positive brand identity in the market. Another insight from the business literature is to fo-cus on income generation. Can the product generate revenue for the micro-entrepreneur? Dowling notes that B2B relationships “are designed on the understanding that each party contributes to the commercial success of the other [23].” This is especially im-portant for micro-enterpreneurs whose resources are tightly con-strained [4, 5].

DfME incorporates these insights with lessons drawn from the four case studies presented in this report to formulate a sin-gle approach. The guiding philosophy is to build brand iden-tity by designing a product that increases the income of the micro-entrepreneur and supports a service plan that continues and grows the relationship between the micro-entrepreneur and your company.

2 Related Literature

Design for Micro-enterprise is a structured design process methodology, which draws from a rich Design for “X” (DfX) lit-erature. Holt and Barnes provide an overview of a range of DfX methodologies including Design for Assembly, Design for Man-ufacture and Design for Environment [24]. Design for the BoP and related methodologies are a subset of DfX meant to help de-signers create products that sustainably improve the livelihood of people who do not have their needs met [15]. Similar strategies, which have the same goal but approach it from different perspec-tives, include the Product Service System approach [3], Design for Extreme Affordability [25] and Design for the Bottom of the Pyramid [12, 26].

Due to its focus on entrepreneurship, Design for Micro-enterprise also incorporates lessons from business literature. In particular, DfME highlights the differences between B2B and

B2C transactions as a way to evaluate design decisions. Mu-dambi demonstrates how service and branding are important to B2B markets in differentiating competitors [22]. Lam makes a similar connection between service and customer loyalty in B2B [27]. In fact, intangible characteristics such as customer perception of service quality and brand image have been shown to be more important than product features in some B2B situa-tions [21]. Less has been written specifically about B2B transac-tions in emerging markets, but service has been cited as an impor-tant strategy for companies looking for an advantage in emerging markets [1, 4].

Donaldson raises concerns over the focus in Design for the BoP on early stage design and not on distribution, manufacture or service of the products [15]. These factors may ultimately have more of an impact on the success of the product. The use of remote design and short-term consultancies has also been crit-icized [16]. Although these practices are prevalent throughout the field, they make it difficult to practice user-centric design, especially in a cross-cultural setting.

Design for Micro-enterprise seeks to address these critiques by integrating lessons from B2B markets. Shifting the focus from a consumer product to a commercial relationship also ad-dresses many of the concerns raised about the original design methods in this area. DfME is meant to be practiced in a design team where design decisions support both user-centered design as well as business requirements such as service, distribution and production. The guidelines are intended to help the designer col-laborate with the business and logistical members of the team and produce concepts with a higher chance of success in emerg-ing markets.

3 Methodology

This study consists of two parts. First, insights from liter-ature and interviews with four professional designers who work specifically designing goods for emerging markets are synthe-sized to present a framework for succesful product design in these areas. Second, the framework is explored against four case studies. The cases were selected along two criteria. The products had to have documented success in emerging markets and be at least partially used by micro-entreprises. The case studies rep-resent a variety of product types, markets and company profiles and include some products and systems traditionally thought of for an individual user rather than for micro-enterprise (income generating for the consumer). The report uses the case study method described by Yin [28].

The goal of each case study is to gain insight into the strate-gies used by designers of successful products for emerging mar-kets and use this to revise the framework. The four cases pre-sented are the Nokia line of cell phones for emerging markets, a range of solar lamp products, several drip irrigation systems from India and two improved cookstove solutions. In each case study,

the market for the product is analyzed. Contextual information about the product and manufacturer is also presented. Although performance metrics such as sales numbers were examined, it is difficult to gain independent confirmation of the numbers repre-sented by the organizations themselves [15]. Instead, our anal-yses of these companies focused on whether the products were successfully sold on the market and which DfME guidelines, if any, were met. Metrics such as size of the company, type of company, location,and company age are presented to give a more complete picture of the product development environment. Prod-uct features are then compared to the DfME framework. Two alternative strategies for product success, Design for Cost and Identifying a good business opportunity, are examined with re-spect to each case [14, 25]. These two alternative strategies were applied because they are commonly used in emerging markets and they contrast with DfME in terms of focus. We expect these alternatives to highlight DfME’s strengths and shortcomings. Fi-nally, design strategies drawn from the case examples are sum-marized.

The final DfME guidelines, which synthesize business in-sights, designer insights and include lessons learned from the case studies, are then presented. These are meant to be used by future designers as one approach when considering products of this type for emerging markets.

4 Design for Micro-enterprise

The interviews with the four practitioners highlighted strate-gies that they believed were important to consider when design-ing products for emergdesign-ing markets. The main conclusion from the interviews was that the design choices should support the business plan of the end-user. As one designer noted, ”income is the best ’hook’ for a product, meaning customers are most likely to buy products they can see will help them generate income. DfME is a specific application of user-centric design where the user is a micro-entrepreneur in an emerging market. The guide-lines are all within the context of gaining a deep understanding of the users needs. The guidelines are meant to focus the de-signers questions and strategies around the complex challenges facing these users.

Guideline 1: Design for the Entrepreneur’s Busi-ness Plan The first and most important guideline is to de-sign for the entrepreneur’s business plan. Implicit in this guide-line is that the designer must have a deep understanding of the needs of the user not only as a consumer but also as a micro-entrepreneur. Several strategies were described by the designers as ways to achieve this goal. Revenue Generating: The first is to make revenue generation central to the functionality of the prod-uct. This revenue generation should be clear, easily explained and understood by the end-user. Is it clear how to make money

using the product? For example, power metering in several so-lar systems currently on the market allows micro-grid operators to accurately charge their customers. Upgradable: The second strategy is to design the product to accommodate different user needs as the business grows with time [29]. The product should have the ability to increase its performance capacity as the en-trepreneur’s business and capital grow. Can you size the product appropriately for your business and then easily grow it later? For example, a farmer buying a drip irrigation system can buy a small system and then later buy add-ons to increase its capacity without buying a whole new system.

Guideline 2: Establish a Reliable Brand Identity

The second guideline revolves around establishing a positive brand identity associated with reliability. A positive service relationship is imperative to the relationship between the en-trepreneur and manufacturer. The entrepreneur relies on the product and has a low tolerance for product failure [12]. The interviewed designers related two main strategies for avoiding product failure. Design for Reliability: One method is to design a robust product with a long expected life-cycle which does not need to be serviced very often. This can be done through mate-rial selection, component selection and simplification of the sys-tem. A rich body of literature describes similar strategies under Design for Reliability [30]. Design for Maintainability: An-other strategy is to design the product so it can be serviced lo-cally. Organizations utilize methods such as standardized parts and easy to disassemble systems. Okogbaa and Otieno provide an excellent overview of other strategies in Design for Maintain-ability [31].

Guideline 3: Consider Multi-functionality The final guideline is to consider multi-functional or convergence prod-ucts [32]. Practitioners reported that the use of this strategy is highly dependent on the particular market and product type. For some markets and product types, such as solar lanterns, multi-functionality was seen as key to a product’s success. The solar lantern was more desirable to the consumer with the ability to charge cell phones [33]. However, multifunctionality can lead to performance trade-offs. A Swiss army knife has many blades but none cut as well as a single purpose-designed knife. This strategy would be much less useful for agricultural processing products such as a wheat thresher. Despite this limitation, the existence of a number of counter-intuitive examples suggest that designers should consider if it is useful to the end-user to include additional functions in their product aside from the core functionality.

These guidelines are meant to suggest which strategies or perspectives are most important when designing for emerging markets. In short, DfME suggests that income generation, ser-viceability and then multifunctionality are the key aspects, in that order, for product success in emerging markets. Although there

are many alternative strategies, several of which are presented above, we will be comparing DfME to Design for Affordability which focuses on minimizing the retail price point of the product.

5 Results

Case Study 1: Nokia Emerging Market Cell Phones

The Nokia line of cell phones has been cited as an exem-plar of successful product and business strategy in emerging mar-kets, with approximately 35% of their total sales in 2009 coming from emerging markets [11]. Many phones in these markets are used by micro-entrepreneurs. These phone owners generally op-erate as a mobile pay phone, renting out their phone to others in the community to make calls when infrastructure lacks other communication means. Figure 1 shows the Nokia 1200, one of the most popular entry-level phones sold in emerging mar-kets [34]. The dominance of the Nokia phone in these marmar-kets is a good example of how the guiding principles of Design for Micro-enterprise can be implemented. Although this case study will focus on the features and business innovations that impact micro-entrepreneurs, the design of the cell phones was within the context of user-centric design. Nokia invested heavily in under-standing the local users’ needs. They established design centers in the emerging markets they were targeting [12]. This effort allowed them to gain a competitive advantage over both MNCs, such as Motorola, as well as local cell phone manufacturers. Dur-ing the time period from 2005 to 2009, Motorola produced a line of phone with same price points as Nokia which fared poorly and led to Motorola falling to fourth in many of the emerging markets [11].

In designing their line of phones for emerging markets, Nokia focused on building a strong positive brand identity as-sociated with reliability. In an interview Antti Kujala, the lead designer for entry-level phones, said Nokia wanted to “avoid the look of ‘cheaper’...boxes that look very brittle and lack ro-bustness [34].” A dust-repellent keyboard, higher-quality mate-rials and an easy-grip back designed for high-humidity environ-ments are examples of design decisions driven by reliability con-cerns [11,34]. One user interviewed explained that all of his fam-ily used Nokia phones because, “You can drop it on the ground many times and it still works [35].” The company also made ser-vicing their phones easier by sharing components among differ-ent models and having fewer compondiffer-ents than competing mod-els [36]. Nokia also invested heavily in building a distribution and retail network which doubled as a service network. For ex-ample, it uses a fleet of dedicated vans to reach rural Indian cus-tomers for both marketing and service work [36]. Nokia has also invested in building relationships with independent retailers to further grow their distribution and service network [11]. In sum-mary, Nokia maintains a strong brand identity in emerging mar-kets. It produces a high-quality product that is reliable in local conditions, investing in local technicians and distributors as well

as its own network when needed.

FIGURE 1. The Nokia 1100, one of the most popular entry-level phones sold by Nokia.

Nokia also utilized a multi-functional strategy with their phones. According to Kujala, the change in paradigm from a single-owner phone to a shared-use phone was pivotal in their design process [34]. The Nokia phones feature multiple con-tact lists which make it easy for users to share the same phone and keep their contact lists separate [12]. The phones are also equipped with a one-touch LED flashlight. The phones are also often equipped with a radio receiver. These features, especially the flashlight, are cited as a major advantage over competing models and a driving force behind Nokia’s No. 1 position in emerging markets [11].

Nokia did an excellent job of educating potential customers about their products and how the phones can be used by micro-entrepreneurs. Nokia includes 80 languages in its user interface, meaning in situations where there are multiple local languages any user can easily interact with the phone [12]. The phone features a demo mode to familiarize the user with the operation of the phone. Nokia also developed “eRefills”, a prepaid usage tracker which displays the exact amount and price of the airtime used in each call [11]. This metering is useful when charging customers per call. The multiple address books are also useful for the entrepreneur as a service provided to repeat customers. Without this business model, many of Nokia’s users in emerging markets would not have been able to afford the phone [11].

Although Nokia made efforts to reduce the retail cost of the phone, many of their design decisions suggest that they were not making the cheapest possible phone. These decisions include their material choice, the effort to avoid a cheaper look, and the final cost which is a significant portion of their target market’s in-come. In this case, another compelling alternative is that mobile phones are simply so useful in these markets, the demand for the ability to communicate is so high, that these design decisions did not affect consumers’ choices. Customers would buy the phone regardless of the material selected or whether it supported their business. However, this theory does not explain why Nokia is so

dominant compared to other cell phone providers.

Nokia was able to achieve and maintain the Nokia 1100’s number one position in emerging markets from 2003 to 2010 by utilizing an understanding of their customers, supporting micro-enterprise activities and by providing a high-quality phone with locally available service. One aspect not covered in the original formulation of the DfME guidelines is the importance of educat-ing the end-user on how the product can support their business. This will be incorporated into the following case studies.

Case Study 2: Solar Lighting Technology

According to a joint International Finance Corporation and World Bank report, 590 million people are not connected to their national electrical grid in Africa alone. Many users rely on flame-based technologies, such as paraffin lamps, for lighting [33]. Driven by this large potential market, solar lighting technology has become a rapidly growing field for emerging markets. Com-panies such as D. Light Design, Greenlight Planet, and Nokero have all produced solar lighting solutions aimed at this market. Their user base includes many entrepreneurs who either use the lights to support their business; keeping their shop open later at night, advertising their shop or using the lights to charge cell-phones for a fee [33]. Although these companies utilized differ-ent strategies, their shared goal was to provide reliable lighting in off-grid situations. Many other companies have also focused on using solar technology for electricity generation in these mar-kets. Although these technologies can also be considered solar lighting solutions, this case study will focus solely on products whose primary focus is lighting; specifically those shown in Fig-ure 2, the D.light S10, Greenlight Planet Sun King Pro, and the Nokero N200 [37–39].

This case study will highlight issues which came up repeat-edly in the two interviews with designers working on solar light-ing products. The first is the durability of the product and how it relates to product branding and customer acceptance. The second is the desire for multi-purpose functionality in the lighting solu-tion, especially as it applies to entrepreneurs. The third is the im-portance of educating the consumer about the value proposition and embedding that in the functionality of the product. Finally, the issue of affordability is addressed.

Product reliability was highlighted as a foremost concern in both designer interviews and market research. Lighting Africa found that “lack of trust in product quality and credibility of manufacturer’s claims” were major deterrents for potential cus-tomers. Customers interviewed were highly risk-averse to prod-uct failure [33]. Designers mitigated concern about prodprod-uct fail-ure through a focus on durability and longevity. This was demon-strated in several ways including feature selection, marketing and service networks. The material and feature selection of many of products offered in this area focus on durability. The technical specifications for all of the products highlighted their resistance

FIGURE 2. Clockwise from top left: Greenlight Planet Sun King Pro, Nokero N200, D. Light S10

to breaking. For example, the Sun King Pro lamp offers “un-beatable solar panel durability” with a strengthened glass panel face [38]. The d.light S10 features rain-resistant housings [37]. The N200 is “durable,” and “rainproof [39].” Long product life cycles are also emphasized. The Sun King highlights its expected battery life of 5 years [38]. The S10 has “robust circuitry for long-life performance [37].” Several of the products also feature active battery protection to prevent deep discharging and over-charging and enhance battery life. Another strategy was to focus on the serviceability of the product. The S10 has an easily re-placeable battery. The Sun King has a repairable junction box. Several of the products have a 1-year product warranty for the end-user.

Users also preferred having a multi-functional product. The Lighting Africa survey respondents strongly preferred multi-purpose lighting solutions because they “only have one or two lighting devices but more places to light [33].” Micro-entrepreneurs interviewed had a marked preference for multi-functional lighting products. They desired many more lit loca-tions than other respondents, including the till, storerooms, prod-uct shelves and storefront. Companies responded by incorporat-ing several different use cases into their product. All of the prod-ucts analyzed here feature handles which function as stands and hooks for different lighting needs. The products can be used and are marketed as task lighting, flashlights for mobile lighting, and lanterns/lamps for indoor lighting. The Sun King also charges cell phones. This was seen by designers in different markets a variety of ways. Some users rented out the cell phone charging feature to generate income. In other markets, cell phone charging was reported as being used as a convergence product by single

users. One company which started out pursuing a solar lantern design switched to simply solar charging as users highly valued this feature.

The Lighting Africa report concluded that “educating the consumer is very important. ...[Companies] must make buyers aware of the problems that they are facing and how the new lighting devices overcome [them] [33].” The report emphasizes teaching users about savings in operating costs, ancillary benefits to education and the impact on escaping poverty. This is espe-cially true for micro-entrepreneurs, who spent more on lighting than the average user [33]. One educational strategy was to fo-cus marketing on savings gained by switching from kerosene or paraffin to solar energy. All of the products mentioned this is their promotional literature. Another strategy was to make the devices very easy to use and thereby eliminate the need to explain how the product solves the user’s needs. All three devices have minimal connectors, one for connecting to the solar panel and possibly another for charging phones, and simple on-off switches and brightness controls. The Sun King Pro addressed this issue using feedback monitoring systems. The Sun King has an LCD display the amount of operating time left in the battery and also a charging indicator for help placing the solar panel.

Finally, the issue of affordability is a major concern in emerging markets. Although some strategies emphasize lower-ing the price point as much as possible, both designers and the Lighting Africa report highlighted that lowering the price point should not be done at the expense of durability or performance. The willingness to pay increased five to ten times between hear-ing the initial idea of a product and holdhear-ing the physical product. “Consumers . . . quickly recognize and respond to the value proposition [solar lights] present once they have more informa-tion [33].” The products range from $15-25, a large porinforma-tion of the average $125 monthly income for a family of four in the Light-ing Africa survey. These companies have found success at these relatively high price points by offering quality durable products and focusing on brand management. For example, d. light had sold over 220,000 units by the end of 2010. This is encapsulated in user responses to what constitutes an ideal lighting product. Respondents indicated that the ideal lighting product “should be made by a reputable manufacturer in order to increase consumer confidence . . . indicating the value of building up brand recog-nition. [33]”

An affordable price point is, as demonstrated above, a criti-cal part of the success of any solar lamp. Howeveer, the market research shows that these lamps are finding success at a rela-tively high price point. It is possible that any solar light would be successful in this area due to high demand. However, many solar solutions are not successful and kerosene lamps continue to dom-inate the market. The lamps covered in this study have been able to overcome the familiarity and popularity of kersone lamps by focusing on income benefits and adding multifunctional elements such as phone charging. Also many companies offer cheaper

al-ternatives, including the lower end of the product family from d.light. The relative success of the models which include phone charging, use more robust materials and have better performance does not fit the Design for Cost model.

Companies and designers in the rapidly growing solar light-ing market have utilized strategies focuslight-ing on the durability, re-liability and multi-purpose aspects of their products. Several for-profit start-ups have found considerable success in this space by emphasizing the value proposition in their product and empow-ering micro-entrepreneurs to make income using their product.

Case Study 3: Drip irrigation in India

Drip irrigation is the practice of delivering small amounts of water directly to the base of each plant in a field using a system of tubes with small emitters at each plant location. Originally developed for large-scale agriculture in arid climates such as Is-rael, it has recently been the focus of many small-scale farmers in emerging markets [40]. These systems have many advantages over other irrigation schemes, especially in areas where water management is a crucial issue. Drip irrigation has grown rapidly in India, driven by both government programs aimed at improv-ing water use efficiency and by the increases in crop yield us-ing this method [41]. There are a variety of organizations who have developed products for this market. Large domestic cor-porations such as Jain Irrigation Ltd, MNCs such as John Deere and Netafim, non-profits such as International Development En-terprises India (IDEI), and small start-ups such as Driptech are all targeting small farmers in this area. These companies are seeing explosive growth in these product areas. For example, Jain Irrigation Ltd.’s revenue from micro-irrigation products has quadrupled from 2007-2011 and accounts for over half of its to-tal revenue [42]. This case study will examine several of these products, specifically the Jain micro-irrigation range of products (shown in Figure 3), the IDEI KB drip system and the Driptech irrigation system. Interviews with designers regarding the strate-gies they used as well as market research regarding the impact of drip irrigation for small farmers will also be examined.

FIGURE 3. The Jain Irrigation Ltd. Micro-irrigation system [42]

The choice to focus on drip irrigation instead of other types of irrigation schemes, such as flood or sprinkler irrigation, was a major decision for many of the organizations in this area. This was highlighted in reports and the interview with a designer who led the development of a drip irrigation product for India. Sev-eral reasons were given for choosing drip irrigation, but the driv-ing force was the total amount of income gained by usdriv-ing drip irrigation. As seen in Indian field tests on a variety of crops, drip irrigation has a positive impact on both crop yield and water savings [40, 41]. Depending on the crop, the increase in yield is anywhere from 5-50% with most yields increasing 30% us-ing 50-60% less water. The ability to use these systems without access to electricity was another factor. Other systems require electric or diesel pumps that have larger operating costs. Drip irrigation technology was chosen due to its impact on the small-scale farmer’s bottom line.

These systems support the entrepreneur’s business in other ways as well. All of the systems are designed to be modular and expandable. The farmer can easily buy an appropriately sized system, adding more tubes for larger plots of land. In this way the farmer can also add capacity in the future when they have more capital without losing the original investment. The farmer can easily optimize the irrigation system for their farm. Other strate-gies include service networks that provide services outside of the irrigation system. For example, Jain Irrigation Ltd. provides both business and agricultural support free of charge to make sure that their systems have the greatest possible economic impact on their customers. IDEI collects market information on local high value crops and does cost-benefit analyses for their customers. They further support the farmers by identifying and enabling some lo-cal farmers to become nursery growers and micro-entrepreneurs selling sustainable farming materials to their community.

Serviceability was another concern brought up by the de-signer. The products addressed this issue in different ways. Driptech explicitly designed their system with fewer pieces, making it easier to maintain. Their system also replaced emit-ters located at the plant with precisely placed holes in the tubing. This choice reduces the amount of skill and tools needed to re-pair the system, allowing the farmer to perform the most common repairs. The Jain micro-irrigation system is more complex, but has a large local sales and service network. The design of their system focused on reliability. The system has filters and other mechanisms to prevent clogging of the emitters and increase the lifetime of the product.

IDEI chose a hybrid strategy with the KB drip system. It is designed to be highly customizable. The farmer can choose to use pre-punched hole, micro-tubes or button emitters as the wa-ter emitting device. The system can be operated using gravity or with a motor, diesel or electric. These choices represent a trade-off between performance, complexity and cost. A farmer can easily switch to a more complex system if the need arises. IDEI also has a large system of local traders they use for sales and

ser-vice. They also utilize the network of local micro-entrepreneurs they created to keep in contact with their users and get feedback. Many irrigation systems focus on achieving the lowest pos-sible cost due to the thin margins involved in small-scale agri-cultural production. However, the systems presented chose more expensive solutions, such as complex emitters, because of in-creased income benefits for the farmer. As there are many irriga-tion opirriga-tions open to each farmer depending on their situairriga-tion, it is unlikely that this is a major unmet demand specifically for drip irrigation.

In conclusion, irrigation companies in India have achieved rapid growth through drip irrigations products and support ser-vices which focus on improving the revenue of small-holder farmers.

Case study 4: Improved Cookstoves

This case study compares two improved cookstoves, shown in Figure 4: the Protos Plant Oil Stove by Bosch and Siemens Home Appliances Group (BSH) and the Grameen Shakti Im-proved Cooking Stove (ICS). Grameen Shakti is a local NGO in Bangladesh which focuses on developing micro-entrepreneurs through technology. The Bosch and Siemens Home Appliances group is a MNC which was targeting rural consumers in Indone-sia with the Protos. Although they were operating in different markets, both organizations’ stated goal was to combat indoor air pollution caused by cooking on traditional stoves or open fires [43, 44]. This is a driving force in the development of many im-proved cookstoves as indoor air pollution causes upwards of 1.5 millions deaths mainly in emerging markets [45].

FIGURE 4. Right to left: Grameen Shakti ICS, Protos Plant Oil Stove

The Protos illustrates how consumer design goals can lead to sub-optimal outcomes. BSH stated that the goal in developing the Protos was to create a stove which was “high quality, safe and as easy as possible to use [44].” However the device also had to be “cheap enough for people in developing countries to be able to afford it [44].” This exemplifies common thinking dur-ing consumer product development, the tradeoff between quality and price matched as close as possible to consumer needs, but

without a clear understanding of the consumer’s broader poten-tial need for micro-enterprise. The product was tightly focused on cooking in the home, and therefore was not multi-functional. The design did not account for a local service network or have features intended to make it more robust. This was later identi-fied by BSH as the most important factor in its lack of success. The Protos went through several field trials and was in series production in Indonesia before being discontinued due to lack of sales. BSH determined that the lack of an established market for plant oil and the increased time and effort to cook when com-pared to kerosene stoves were the two main factors in its lack of success.

The Grameen Shakti ICS took a different approach in its design. Grameen Shakti developed the ICS for use by micro-entrepreneurs such as restaurants and food production, in ad-dition to consumer home use [43]. The product met all of the strategies listed in the guidelines. The stove is upgradable and available in several different sizes, from one to three mouth openings [43]. The ICS is also designed for service with much of the ICS manufacturing and repair occurring at a local level. The metal chimney and grates are manufactured at one of 45 Grameen Technology Centers and then the stoves are assembled and built locally. Grameen Shakti achieves this through a sales and service network they developed including 3,500 community technicians and entrepreneurs. This networks acts in conjunction with Grameen’s extensive network of 1400 local offices tasked with linking the technology with income-generating activities. The ICS is also multi-functional with optional add-ons for soap manufacturing [43]. The ICS has been successful in this market with 391,000 units sold and installed since 2006 [46].

As this case study presents, the Grameen Shakti ICS was able to find success in the same product area as the Protos by focusing on supporting entrepreneurs and local service. BSH was unsuccessful despite the effort and resources spent on test-ing and developtest-ing the Protos stove. There are major differences between the two projects that may have contributed to the dif-ference in success. First, Grameen Shakti, as a local NGO, may have a better understanding of user needs than BSH. Second, dif-ferences in the markets may have contributed to the results. Ru-ral Bangladesh may be a better market opportunity than ruRu-ral In-donesia. Finally, the distribution and service networks developed by Grameen Shakti certainly were a large factor in its acceptance by end-users. However, this highlights the differences in the de-signs. The ICS was set up to take advantage of local network and the Protos was not designed to be serviced by local technicians. It is unclear whether the local technicians had the knowledge or tools necessary to effectively repair the Protos stoves.

TABLE 1. CASE STUDY COMPARISON

Product Org. Type Org. Age No. Employees Location Unit Sales Price ($) Time on Market (yrs)

Nokia 1100 MNC 148 100000 Global 200 Million 90 9

D. Light S10 SME 6 100 43 Countries 1.3 Millionn 25 5

Nokero SME 3 6 33 countries Not Availble 15 2

Sun King Pro SME 5 350 India, Africa 3.5 Million users 15 4

Driptech SME 5 30 India >10000 185/acre 4

IDEI KB Drip NGO 12 185 India >250000 148/acre 12

Jain MNC 50 7500 India >500000 370/acre 18

BS&H Protos MNC 46 46000 Indonesia N/A N/A N/A

Grameen ICS SME 1500 7500 Bangladesh 632000 10 7

This paper proposes a new set of guidelines focused on de-veloping commercial products for micro-entrepreneurs in emerg-ing markets. The guidelines were drawn from interviews with four practicing designers and a literature analysis. These guide-lines form a model for how product success can be achieved in these markets. This model emphasizes a focus on the en-trepreneur’s business plan, the relationship between the mana-fucturer and the micro-entrepreneur and multi-functionality over other factors. Several themes emerged from case studies. First, the guidelines are presented in order of importance. Revenue generation for the micro-entrepreneur was central to the prod-uct’s success in all of the case studies. For example, in the drip irrigation case study, Jain Irrigation provided extra services free of charge to ensure their product generated additional income for their users. Although the case studies also highlighted how multi-functionality can have a positive effect on product success, its importance was highly dependent on the market. For exam-ple, in the cell phone and lighting case studies users placed a large premium on multi-functionality, but did not in the other ex-amples. Second, educating the consumer about the value propo-sition was considered integral to product success. Companies in these case studies provided features or services that explained to potential customers how to generate revenue with their product. This was not explicitly indicated in the original formulation of the guidelines. Finally, alternative models for product success, such as Design for Cost and identifying good business opportu-nities did not fit these case studies well.

Although these alternative strategies are compelling in many ways, they were not appropriate for these cases. An affordable retail price is essential to product success in many markets. Low-ering the price is one way to increase the value proposition of a product. However, the results from the case studies suggest that other factors are more important to product success, especially when designing for micro-entrepreneurs. All of the examples were able to achieve success at relatively high price points in

the face of cheaper competitors. Identifying a good business op-portunity is also critical to product success. If there is a high demand for your type of product, then this may outweigh other factors which affect product success. For example, if there is a high demand for mobile communication in a particular market, any cell phone might become successful regardless of design in-tent. This does not fit the examples presented above as similar products were not successful in the same markets.

As shown in Table 1, the case studies represent a wide range of organizations and products. Small, medium and large compa-nies have all used the strategies presented to achieve success in these areas. These comparisons are meant to highlight the range of companies working in this area and give a sense of the context for the case studies, not to draw conclusions about which product is the most successful.

This study is limited by several factors. First, although the case studies presented represent a variety of markets and product types, the set is not exhaustive and may contain selection biases or errors. This is also true of the sales performance data, which was compiled from a variety of sources and represented a conser-vative lower bound of the number of units sold. Also, because the products have been on the market for differing lengths of time, this may be under-representing the success of newer products. Likewise, for many of the products there was no independent testing of the features or specifications listed by the manufac-turers. Although this data existed and was used for the lighting products, the rest of the products were categorized primarily on the manufacturers’ claims. Finally, a comparison of units sold across product categories is limited due to differences between product types. For example, a nutritional bar will have a much higher sales volume than an automobile for the same market. A better metric might be economic impact on the entrepreneur, but that type of data is difficult to determine.

7 Conclusion

In conclusion, this paper proposes a new approach for prod-uct design for emerging markets called Design for Micro-scale Enterprise. This approach consists of three guidelines: Design for the Entrepreneur’s Business Plan, Establish a Reliable Brand Identity and Consider Multi-functionality. These guideline were achieved through strategies such as design for reliability, design for maintainability, upragadeabilty and multi-functionality. As seen in the case studies, considerable success can be achieved in these markets by focusing on the unmet needs of micro-entrepreneurs.

8 Future Work

It is the authors’ hope that this proposal furthers the discus-sion of best practices for product design in emerging markets. Future work will include two major threads. The first is to com-pile a more comprehensive list of products used in one particular emerging market and investigating trends in that data set. Build-ing on current work by the Comprehensive Initiative on Technol-ogy Evaluation, future work will also consist of categorizing and understanding design decisions which affected the success of a product. The second thread will consist of examining the im-pact of this approach on education. Design classes focusing on emerging markets are a growing part of many engineering cur-riculae and incorporating best practices into these courses and investingating their effect will be paramount to producing engi-neers and designers able to work in a global future.

ACKNOWLEDGMENT

The work described in this paper was supported in part by the National Science Foundation under Award CMMI-1130791 and the Graduate Fellowship Program. We would also like to thank Sydney Carter for her thoughtful assistance. We would also like to thank the designers interviewed for theirvaluable feedback on many of the case study examples. The opinions, findings, conclusions and recommendations expressed are those of the authors and do not necessarily reflect the views of the sponsors.

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